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After Flouting Print Run Limits, Publisher Faces Dozens of Lawsuits

November 15, 2010

by David Walker

Photographers, photo agencies, artists, and others who have
contributed content to textbook publisher Houghton Mifflin Harcourt have
filed more than 30 copyright infringement claims over the past five
years in federal courts in Alaska, Florida, Pennsylvania, Massachusetts,
New York, Arizona, and other states. More claims are in the works, says
attorney Chris Seidman of Harmon & Seidman LLC, which has represented most of
the plaintiffs and has so far won settlements for about 20 of them.

"The scheme that Houghton employed was to license for the lowest
amount it thought it could get away with, and then print whatever it
wanted," Seidman says. One HMH executive said in a court deposition that
the publisher ignored print run limits in its photo licenses as
meaningless numbers.

"It's a compelling story of corporate greed and malfeasance," says
Seidman. "This venerable publisher has lost it's way and veered off on a
bad path of cheating the people who contribute to its existence,
without whose contributions it wouldn't exist."

In case after case, photographers and other content providers have
alleged that they licensed their copyrighted works for print runs up to
40,000 copies, but the publisher then printed a million or more copies
without notifying them or paying them additional compensation. "The
cases allege an extremely widespread scope of this infringement
practice," Seidman says. "We have claims involving hundreds of [Houghton
Mifflin] publications, and thousands of images."

Seidman says that New York photographer Jay Maisel was the first to
file a claim for use of one of his images beyond the scope of HMH's
usage license. Maisel sued in 2006 over an image of an interior of a
mosque that appeared in a textbook series called Language of Learning
Grade 9.

Houghton Mifflin acknowledged that they had exceeded the licenses
granted by Maisel "and wanted to make it right," Seidman says, but in
subsequent cases "they have decided to deny that any copyright
infringement has occurred, and to deny that any license has been
violated."

He adds that the publisher uses "a scorch-the-earth tactic. They use
their legal team to defeat claims on procedural grounds, not on the
merits."

But in most cases so far, that strategy hasn't worked for the
publisher. Courts have generally rejected its motions for dismissal,
effectively forcing the publisher to settle to avoid trial. (Seidman is
prevented by non-disclosure agreements from saying how much money
Houghton Mifflin has paid to settle some of its cases.)

One particularly revealing case was that of Ted Wood v. Houghton
Mifflin Harcourt, which was settled after a federal judge in Colorado
denied the publisher's request to throw it out. Wood had licensed six
images to HMH between 1999 and 2002 for two series (Language of Learning
Grade 6 and Grade 7) and a periodical called Great Source Summer
Success Reading Magazine. In all instances, the licenses were for 40,000
copies. Wood sued after he heard because of other lawsuits that the
print runs exceeded 1 million.

"I was completely unaware of the situation," says Wood, explaining
that he received no notification that the print runs had exceeded
40,000. He sued after learning of the license overruns from other
contributors.

In a deposition taken in response to Wood's infringement claim, HMH
senior vice-president of product development Donald Lankiewicz said
that the 40,000 copy limit of licenses "became a sort of boilerplate
number" and "just an industry convention" that didn't really limit
publishers to print runs of 40,000 copies.

In rejecting H-M's motion to dismiss the Wood claim, the judge
wrote: "The gist of Lankiewicz's deposition testimony, in short, is that
under his understanding of industry standards, a copyright license that
specifies a print run of 40,000 copies simply does not limit
publishers, which could reproduce over a million copies of the
copyrighted work without seeking further permission from, or paying
additional fees to, the copyright holder."

The judge wrote off Lankiewicz's testimony as "facially implausible
and self-serving claims" and "perhaps even nonsense" on his way to
ruling that no jury could dispute the meaning of a license limit of
40,000 copies.

HMH also argued in the Wood case that even if it did infringe, all
it owed was the difference between the license fee it paid for 40,000
copies, and the licensing fee it would have had to pay for 1 million
copies. Seidman likens that argument to that of a "shoplifter who gets
caught and says, I guess I'll have to pay for the merchandise, and we'll
call it even. And by the way, I demand the quantity discount price that
you give to honest customers."

The judge also rejected the argument, ruling that HMH was liable for
not only the license fee but damages in the form of its profits from
the infringing publications. HMH's response to that was that Wood's
pictures contributed nothing to the profits because they were
insignificant and added no value to its publications.

But the judge wasn't fooled. "If images were truly 'immaterial' in
language arts publications, HMH surely would not be paying to include
those images in its publications," he wrote. In the end, the court not
only refused to dismiss the copyright infringement claims, but refused
to dismiss Wood's fraud claims, which included allegations that HMH
knowingly lied to him about how it intended to use his images.

Wood told PDN that a non-disclosure agreement bars him from saying how much HMH subsequently paid him to settle the claims.

Although HMH has so far paid to settle most of the claims, it has
fended off three of them on the grounds that the plaintiffs' images in
those cases weren't properly registered. Proper registration is required
under copyright law as a condition for filing a claim.

Most recently, a federal court in Alaska threw out Alaska Stock's
infringement claim on improper registration grounds. And earlier this
year, federal courts in New York and Arizona rejected claims by Muench
Photography and Tom Bean, respectively.

In all three cases, the images in questions had been registered as
part of bulk registration programs. Those programs were set up to
register thousands of images at once. But the federal trial courts said
the bulk registrations failed to meet the legal registration
requirements for individual works because they did not list the authors
and titles of those individual works.

"We think the courts have misconstrued the registration
requirements," Seidman says, adding that the Arizona and Alaska cases
have been appealed to the US Court of Appeals for the Ninth Circuit in
San Francisco.

Meanwhile, says Seidman, his firm is preparing new claims against
HMH as photographers and other artists learn about past cases and then
step forward to file claims of their own.

The publisher did not respond to repeated requests for comment about
the lawsuits that have been brought against it, or any changes it has
made in its licensing practices.

According to Seidman, HMH hasn't changed its licensing practices so
much as it has changed the fine print in its contracts to prevent future
lawsuits from contributors. "They're doing it by saying that if you
sign [the license] agreement, any use in excess of the permission that
you are granting will be extended, and that you automatically are
granting us an extension of rights if we need it."

In other words, HMH can print as many copies as it wants to, and
contributors automatically agree to that when they sign license
agreements for their works.